Export sales volumes, although down slightly from the previous year, are the second highest on record. Although imports increased slightly, net exports are still in the top three years of all time.

Canada’s net revenue has increased to 2.3 billion dollars Canadian and is approaching pre-recession levels of $2.5 billion in 2008. Although the value of export sales to the U.S. continued to increase in 2014, reaching 2.9 billion dollars Canadian, that value is still almost 25 per cent lower than the record $3.8 billion reached in 2008.

The value of export sales increased by more than 15 per cent over 2013 levels and reached the highest level in five years in 2014. Québec, Ontario, Manitoba and British Columbia earned almost 95 per cent of the export revenue in 2014.

Volumes

Figure 1: Annual Canadian Electricity Exports (Sales), 2005-2014

Source: NEB international trade statistics (31 March 2015)

In 2014, Canadian electricity exports totaled more than 58 TW.h, which is 4.2 TW.h or about 7 per cent lower than 2013 exports. Although not as high as the all-time high set in 2013, 2014 is the second highest record export year.

Total annual quantities of electricity exports to the U.S. have varied significantly. Over the past decade, gross electricity exports have ranged between approximately 40 TW.h and 63 TW.h annually, averaging about 51 TW.h.

Historically, provinces with hydro-based generation have exported large amounts of power. High export years typically coincide with high precipitation years.

Despite some modest provincial gains, such as British Columbia increasing slightly (from 7 TW.h to 7.4 TW.h), on the whole, Canadian exports decreased from 2013 to 2014. Exports from Quebec and Manitoba decreased respectively to 23.6 TW.h (down 12 per cent) and 8.6 TW.h (down 14 per cent). New Brunswick, which had increased exports by 150 per cent in 2013, managed to sustain those exports at 2 TW.h in 2014.

Figure 2: Annual Canadian Electricity Imports (Purchases), 2005-2014

Source: NEB international trade statistics (31 March 2015)

Imports increased 20 per cent over 2013 to 12.8 TW.h, but remained low in 2014, continuing the trend of the last few years. Although the highest in three years, imports are still almost 25 per cent lower than the 10-year average of 16.7 TW.h. and about 45 per cent lower than the all-time high of 23.6 TW.h in 2003.

A slow U.S. recovery from the economic downturn continues to result in low electricity demand. Nationally, Canada has also not yet returned to pre-2009 electricity consumption levels. As Canadian supply was fairly strong, Canada’s import needs were still quite low.

Canadian provinces have a greater capacity to exchange electricity with American states along north-south interconnections than between neighbouring Canadian provinces. Therefore, although electricity pricing in U.S. markets is usually higher than in Canadian markets, provinces frequently import electricity from the U.S. when domestic supply is limited or transmission capacity to other Canadian jurisdictions is constrained.

British Columbia (B.C.), Alberta, and Saskatchewan were net importers of power in 2014. B.C imported about 9.7 TW.h, more than three-quarters of the 12.8 TW.h imported into Canada. Despite B.C. being a net importer in 2014, the province earned more money from its electricity exports ($388 million) than it paid for the imports ($306 million).

Figure 3: Annual Canadian Electricity Net Exports, 2005-2014

Source: NEB international trade statistics (31 March 2015)

Net exports (exports less imports) of electricity went from a record of 52 TW.h in 2013 to 45.6 TW.h in 2014, with exports of 58.4 TW.h and imports of 12.8 TW.h. This is more than 10 per cent lower than 2013 net export volumes and approximately 30 per cent higher than the 34.4 TW.h ten-year average.

Although gross exports averaged more than 51 TW.h annually over the last decade, net electricity exports averaged slightly below 35 TW.h over the same period.

Supply-demand conditions in 2014 resulted in Canadian net-exports reaching an electricity net-trade value of approximately C$2.3 billion. Despite high net exports, net-trade values are well below historical highs because of lower electricity prices as compared to pre-recession levels.

British Columbia trades significant amounts of electricity. Although the province imported more electricity than it exported in 2013, it earned more in export revenue than it paid for imports. Revenue can be earned by exporting when prices are high (on peak) and importing when prices are low (off peak), subject to system requirements and capacity.

Figure 4.1: Gross Electricity Exports from Canada to the Continental United States by Region, 2010-2014

Source: NEB international trade statistics (31 March 2015)

The Northeast received almost 36 TW.h, or approximately 60 per cent of all Canadian exports in 2014. Exports to this region decreased in 2014 from 2013 by just under 10 per cent. In 2014, almost 90 per cent of annual Canadian electricity exports (51 of 58.4 TW.h) were delivered into the U.S. Northeast and Midwest.

Canadian sales of electricity into the Midwest decreased by approximately 7 per cent, to 15 TW.h in 2014 from 16.1 TW.h, in 2013. Regional export share remained constant, representing just over 25 per cent of Canadian exports in 2014, as in 2013.

Figure 4.2: Gross Electricity Exports from Canada to the Northeastern United States by Region, 2010-2014

Source: NEB international trade statistics (31 March 2015)

Note: PJM (Pennsylvania-New Jersey-Maryland Interconnection), ISO New England (ISO-NE) and the New York ISO (NYISO) operate competitive wholesale electricity markets in the Northeast United States. Because market boundaries do not always coincide with categories used in NEB statistics, data is approximate.

The northeastern United States (U.S.) is the largest recipient of Canadian electricity exports, the majority of which is shared between the New England (ISO-NE) and New York (NYISO) markets.

New England received 18.1 TW.h, or just over 30 per cent, of total Canadian exports in 2014 (a decrease of approximately 0.8 TW.h, compared with 2013).

New York received 16.9 TW.h, or just under 30 per cent, of total Canadian exports in 2014 (a decrease of approximately 1.8 TW.h, compared with 2013).

Following the record high set in 2013, there has been a modest decrease in 2014 Canadian sales of electricity into the U.S. markets of New England and New York, of just under 5 per cent and 10 per cent, respectively. Overall however, sales into these two markets have been increasing steadily since 2010.

Quantities and Revenue

Although the net quantity of electricity exports has risen since 2008, prices in export markets remain lower than historical values. For example, exports of just over 55 TW.h were valued at $3.8 billion in 2008, whereas in 2014 exports of just over 58 TW.h (5.4 per cent higher) were valued at only $2.9 billion (almost 25 per cent lower). However, export revenue has trended upwards since 2012 and is now higher than in the last six years.

Continental U.S. electricity prices have been relatively low since the 2008 financial crisis. In addition, low natural gas prices resulting from increased shale gas production put more downward pressure on electricity prices. Natural gas is a key fuel for U.S. electric generation and continues to increase its market share. However, prices in key exports markets such as New York and New England increased in 2014, driven by increases in spot natural gas prices and higher demand for electricity caused by cold weather in the beginning of 2014. This translated into higher revenue from exports for Canadian producers.

Commentary

The 2014 Canadian electricity market was again characterized by high exports and low imports. However, after four years of steadily increasing exports and decreasing imports, the trend reversed. Net exports decreased slightly in comparison to 2013, due both to decreasing exports and increasing imports. Despite the lower volumes, revenue from exports increased for the second year in a row as a result of higher prices in export markets.

Many provinces have high reserve margins. This means they have more supply than needed on a day to day basis, above the standard 12 to 15 per cent emergency buffer. Examples are the hydro producing provinces of Manitoba and Quebec as well as Ontario with its abundance of nuclear resources. Lower continental electricity consumption following the 2008 economic downturn has given rise to or increased surplus generating capacity in some markets.

The amount of surplus changes year-to-year in response to a variety of factors including domestic demand, outages and precipitation levels which impact hydroelectric generation.

Although Canadian electricity demand has not yet reached pre-recession levels, it has trended upwards in 2013 and 2014. At the same time, electricity supply continues to expand. For example, more than 1 GW of wind and hydro capacity came online in Ontario in2014 and more than 800 MW of wind was added in Quebec in the same year.